The futures brokerage firm Peregrine Financial Group has filed for Chapter 7 protection, after its founder attempted suicide and amid allegations of fraud.
It is alleged that more than $200 million had gone missing at the commodities brokerage. In his suicide note, the CEO of PFG, Russell Wasendorf, Sr. accepted that he had been embezzling his company’s clients by moving the funds of the company to his personal bank accounts. According to his note, he was the only person who had access to the US Banks’s accounts where funds were kept. Once he got the bank statements he would move money to his personal accounts and then forge the statements to give copies to the accounting department. If this is true, then this would be the best example of the need for segregation of duties for companies, especially having multiple people look at bank/ cash accounts. This misappropriation of funds apparently was happening for more than two decades. Surprisingly it went by unnoticed by either the authorities or anyone else in the company.
The government also alleges that between October 2010 and May 2012, Wasendorf filed 31 monthly financial statements with the Community Futures Trading Commission that presented a completely false financial picture of PFG. And no one noticed it till mid-2012.
